Generally, when a person files for bankruptcy under Chapter 13 of Title 11 of the United States Code, i.e., Chapter 13 bankruptcy, that person is considered a Chapter 13 debtor. A Chapter 13 debtor's goal is to repay some or all of their debts pursuant to a Chapter 13 plan of reorganization, generally known as a Chapter 13 plan. Typically, debtors may propose a plan that spans a minimum of about three (3) years and does not exceed a maximum of about five (5) years. During this time the Bankruptcy Code generally forbids the debtor's creditors from initiating or continuing collection efforts against the Chapter 13 debtor without leave of the Bankruptcy Court.
While in Chapter 13 bankruptcy, debtors are generally required to contribute their monthly disposable income to fund a Chapter 13 bankruptcy plan. Debtors are also generally required to make monthly payments using this disposable income for the entire period of the debtor's Chapter 13 plan. Accordingly, Chapter 13 debtors must generally make between about thirty-six (36) and about sixty (60) monthly trustee payments during the period of a Chapter 13 plan.
In most federal judicial districts, the Office of the United States Trustee appoints one or more standing. Chapter 13 trustees to collect the debtors' payments. Chapter 13 trustees are charged with the duty of collecting debtors' payments, accounting for debtors' payments, and distributing debtors' payments to the debtors' creditors pursuant to a Chapter 13 plan. Creditors receive disbursements in a manner permitted under the Bankruptcy Code and pursuant to an individual Chapter 13 debtor's plan.
Chapter 13 bankruptcy trustees generally collect debtors' trustee payments in a variety of ways. One way may be pursuant to a mandatory wage garnishment order entered by the Bankruptcy Court requiring a debtor's employer to make payments on behalf of the debtor. Another way may be to permit debtors to use an electronic fund transfer (“EFT”) network to collect payments, e.g., an automated clearing house (“ACH”) network. However, as is well known in the industry, a significant amount of Chapter 13 bankruptcy trustees in the United States require debtors to make monthly plan payments in a secure form (hereinafter “secure payment form”), e.g., a bank check, cashier's check, money order, and the like. To fulfill this secure payment form requirement, a majority of debtors must physically travel to a brick-and-mortar money service business, e.g., a local bank, post office, convenience store, and the like, to transform funds into a secure payment form that is accepted to a Chapter 13 bankruptcy trustee. As a result, a debtor is generally required to travel to a physical location and purchase a secure payment form every month for about thirty-six (36) to about sixty (60) months. In addition, when purchasing a secure payment form, a Chapter 13 debtor must remember to purchase the correct amount of payment.
Once the debtor has purchased a secure payment form, the debtor must next remember to physically notate essential bankruptcy case information on the secure payment, e.g., the trustee's name in the payee line, the debtor's case number in the notation section, reference to the debtor's case documents for essential information, and the like. In addition, a Chapter 13 debtor must generally retain proof of purchase of the secure payment form, which may be needed in the event that a debtor's secure payment form is not received by the Chapter 13 trustee or is mailed to the incorrect address. Under the current industry practice, debtors may either maintain a receipt from the purchase of the secure payment form or may retain a photocopy of the secure payment form as a proof of purchase. As is typical for current methods of paying a Chapter 13 bankruptcy trustee, a debtor must generally collect and maintain proof for the entire thirty-six (36) to sixty (60) month term of the debtor's Chapter 13 plan.
In addition, debtors must deliver the secure payment form to their Chapter 13 trustee for the entire thirty-six (36) to sixty (60) month period. Debtors generally mail the secure payment form either directly to the Chapter 13 bankruptcy trustee or to the trustee's lockbox service. In the case of a trustee lockbox service, debtors must generally use the United States Postal Service to deliver the secure payment form. Therefore, a majority of debtors must complete yet another physical task of mailing the secure payment form to the Chapter 13 bankruptcy trustee. In particular, a debtor must generally purchase an envelope, fill out the envelope by printing the debtor's Chapter 13 bankruptcy trustee's delivery address or specific lockbox address, purchase and apply the correct postage on the envelope, and deposit the envelope with the post office or other delivery system. Since a Chapter 13 trustee's payment address is not necessarily the same as a Chapter 13 trustee's office address, debtors must be certain that they use the correct address when making a trustee payment. Once the debtor's secure payment form is deposited in the mail, debtors generally maintain little if any proof that the secure payment form has been mailed to and received by the Chapter 13 bankruptcy trustee. Thus, the above-described process is overly complicated and burdensome to the debtor. In addition, the above-described process may be further complicated and subject to greater chances of error occurring when, e.g., a trustee has both a mailing address and a payment address, the amount of a debtor's payment changes and/or varies under the plan, and the like.
Further still, Chapter 13 is considered a wage earner's bankruptcy as Chapter 13 debtors generally work full-time jobs and receive regular monthly income. Since debtors may be required to contribute their monthly disposable income to fund a Chapter 13 bankruptcy plan, a significant amount of debtors generally maintain busy work schedules and have little free time. In light of the widespread adoption of online banking and bill pay, many Chapter 13 debtors may prefer to save time and energy by managing their monthly and/or recurring bills online and/or by using an automated payment system, e.g., convenient and automated online bill payment and management systems. However, as described above, the current system for paying a Chapter 13 trustee is overly burdensome, time consuming and antiquated. In particular, the current system creates mental and/or physical burdens of remembering to perform the described tasks at least once per month to make trustee payments for about thirty-six (36) to about sixty (60) months at the risk of dismissal of their Chapter 13 case. Debtors further risk their privacy as debtors must purchase and mail private information and/or secure Chapter 13 trustee payments using local money service businesses and/or the local postal service.
Additionally, as a result of the numerous steps required to complete the purchase and delivery of a secure form of payment, Chapter 13 bankruptcy trustee payments may be regularly lost, rejected and/or mismanaged during the course of a Chapter 13 plan. Unnecessary expenses and/or inconvenience to all parties involved, e.g., bankruptcy debtors, attorneys, trustees, Bankruptcy Courts, and the like, generally arises from litigation stemming from creditors' and/or trustees' motions to dismiss a debtor's case for failure to make timely payments to a trustee. At a minimum, a motion to dismiss typically jeopardizes the progress of a debtor's case and results in increased administrative expenses, including attorney fees and costs. More importantly, a motion to dismiss jeopardizes a Chapter 13 debtor's assets, and if granted, may leave a debtor vulnerable to continued collection efforts, e.g., immediate repossession, seizure and/or selling of a debtor's personal and/or real property.
Thus, a need exists for improved systems and methods for a Chapter 13 bankruptcy debtor to make payments to a Chapter 13 bankruptcy trustee. In particular, a need exists for a system and method that assists debtors to efficiently and automatically transform funds into a form that is acceptable to a plurality of bankruptcy trustees, assists debtors in efficiently and automatically delivering an acceptable form of trustee payment to a plurality of bankruptcy trustees, and assists debtors to efficiently and automatically manage and track the delivery and/or status of trustee payments. These and other needs are addressed and/or overcome by the systems and methods of the present disclosure.